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I was talking with one of he Walmart buyers today and the topic turned to the price of goods and how they have increased. What he told me did shock me as I had no idea how quickly certain costs increased. There has to be a trigger where inflation comes from whether it is a substantial price increase for petrol/diesel or other delivery costs.

Prior to Covid and the lock downs a container cost them $1K and after the lockdowns the price was $7K per 20ft and $14K for a 40ft. This price automatically is added to the cost of the product which the consumer pays. The Mediterranean Shipping Company commonly known as the MSC two weeks ago increased their container prices by another $500 due to the issues in the Red Sea. This affects every ship of theirs that travels via the Suez Canal which is the main trade route linking the East to the West. Again the consumer pays for this and these prices tend to stick never coming back down to prices we once knew.

Certain products the increases would be seen as minimal due to the number of items in the container but certain items like televisions are packed in a certain way. For local transport no one seems to care ,but direct from the factory they are packed in a certain way to prevent damages occurring. When I was dealing in televisions many moons ago I container would only have 96 televisions and the bigger models would have less. Just on these numbers that is an extra $60 per television with the after lock down pricing.

The problem is most countries around the world are not self sufficient anymore and have handed over their industry to the Chinese and other Far Eastern countries. If we consider what is imported when we walk around our stores more than 70% of the products are imported and this is our own fault for giving what we produced away.

The opportunities that exist now for local manufacturing to open up are massive due to the swing in transport costs and import taxes. The Chinese is no longer the cheap industrial hub it once was with the labor prices on the rise along with increased logistical costs and increased importation taxes.

The problem is this will take years to get back to pre 1970 local production numbers and have people realized that this is now the perfect moment to take back what they lost. Setting up production facilities is not cheap and would need serious investment, but in the long run imported products could not compete locally.

China will be under pressure economically within the next decade and foresee the likes of India becoming the new industrial hub which is happening already. India still cannot get around the cost of transportation however even if they have cheap labor and why the opportunity to manufacture and be self sufficient should still be a priority.

We must not forget that todays prices are still going to rise over the coming years due to the new carbon emission tax being implemented. The buyer mentioned that they have to even declare where the cardboard for the boxes used for packaging comes from and which trees were felled in which forest. The details that are now required are making products we purchase that much more expensive and again the consumer is left paying the bill.

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